What Is Unbundling?

Unbundling is a process by which a company with several different lines of businesses retains core businesses while selling off, spinning off, or carving out assets, product lines, divisions, or 澳洲幸运5开奖号码历史查询:subsidiaries.

Unbundling is done for a variety of reasons, but the goal is always to create a better-performing company or companies. Unbundling may also refer to offering products or services separately that had previously been𝓡 packaged together.

How Unbundling Works

The decision to "unbundle" may be called for by the board of directors or by company managers. The 澳洲幸运5开奖号码历史查询:board of directors may call for it if the company’s stock is performing poorly, the company needs to raise capital, and/or the company wants to distribute cash to 澳洲幸运5开奖号码历史查询:shareholders. 

Unbundling might help the company to become a pure-play for analysts to evaluate. This means focusing on a core offering and can be compared easily to comparables in the industry for 澳洲幸运5开奖号码历史查询:benchmarking. This mi🐻ght improve analyst coverage and stock price.

Management might call for unbundling if it thinks the result would help the company perform𝓰 better. When the board or managers call for unbundling, it often improves the company’s stock price. Unbundling might also occur when one company purchases another for its most valuable divisions but determines it has little use for other aspects of the business.

In some cases, unbundling doesn’t mean a company has sold off its bundled product line, division, or subsidiary. It could mean it has split operations into different businesses while still maintaining control of each busineඣss. When this type of unbundling occurs, the newly-formed companies usually have a great opportuni🌱ty for success in the future. 

Benefits of Unbundling

Product unbundling may be beneficial for a company looking to expand options for its consum🐻ers. For example, a company may offer package deals on products at a discounted rate, but finds not every consumer benefits from the package. The company will decide to unbundle these products to give its customer base a larger selection of items that meets the ✃needs of the consumer. 

When a customer wants less than a bundled package deal, the company may unbundle to meet the needs of the consumer. Whether the company is planning to launch a new offering or unbundle packaged products, it may see an increase in reve🌸nue by offering its consumers more. The business may continue to experiment with its unbundled products, while still analyzing its market on recently-bundled products or new offerings based on the needs of the cus🌊tomers. 

Unbundling your products or services offers more choices for your audience by splitting them into multiple offerings tailored to meet the needs of your audience. This helps a business reach different consumers by offering just what they want. Unbundling can also increase re🌺venue in certain cases.

Example of Unbundling

When a company unbundles, it may maintain a significant percentage of ownership in the new firm(s). In 2001, Cisco unbundled a division that became Andiamo, but it retained some ownership because it wanted to be involved in the development of a new product line that would give it a 澳洲幸运5开奖号码历史查询:competitive advantage.